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tv   Fast Money Halftime Report  CNBC  October 26, 2012 12:00pm-1:00pm EDT

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>> some great pictures there, robert. thank you very much. have a great weekend, everybody. that does it for us on "squawk on the street." as weigh hit noo hit noon it's back to headquarters and the "fast money halftime." carl, thank you very much. and welcome, everybody, to the halftime report. i am brian in for scott. four hours until the close. and here's how things look on this friday, october 26. we are in the red but not by much. the dow down 34 points. .25%. come on. the s&p down more, the nasdaq, as well. in fact, tech has been a wreck much of this week. that is going to be a big theme all this hour. it has been a wild ride for monday until today. all the way from apple to yahoo!, actually until zynga. literally a to z in technology. we are pleased to have editor-in-chief and ceo of business insider join us, he'll be here for the hour to help us make sense of all that is going on. we're also trading all the big movers today with guy, pete, the
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better looking, john, and steve -- >> thank you -- >> that's right. >> thank you. >> wait a minute. >> getting to the battle of the technology titans startsing with the letter a. amazon and apple reporting disappointing earnings. stocks aren't offering an opportunity to buy through the dip, though. amazon a little higher on the day. apple holding above 600. so what is the better value right now, amazon at 97 times earnings or appellate maybe a little over ten times earnings -- or apple maybe a little over ten times earnings? henry? >> apple did have a $100 dip leading into the earnings, so we are down. that apple's profit margin is threatened, into next year people are looking at that, they'relooking at the margin coming down. amazon is making huge investments now which are artificially depressing earnings. and that over the next few
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years, those will pay off. i don't know whether they will, but that's what -- >> i'm going to push back in two ways. first on apple. one, fund manager said it great last night. said it's the only stock he owns where their problem is they can't make products that people want fast comment on amazon, w you said, it will pay off down the road for the better part of a decade. >> it has paid off for investors -- >> when they make smithsonian a different story. >> absolutely. i'm surprised that the stock has held up the way it is given how much money the company is investing. jeff bezos is clear that he doesn't expect all of his investments to pay off. but he's being aggressive. some would be nice. the street is looking to that. that's why the stock's holding up. apple, the price is reasonable. they have a huge market in all of their main products. they should be in good shape going forward. but i do think the margin is a risk to the companies. incredibly unprecedented. >> although everybody focus on the ipad, maybe a slight miss.
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the iphone a higher margin item. that is doing well. >> absolutely. >> anybody else got a take -- i'm sure nobody else here has a take on apple. >> i'll throw a quick one. >> yeah. the better looking one, now you're talking to me. i would say to henry that whenever apple has product launches, obviously the margins do get compressed periodically during that launch. and that's going to be about 80% of that revenue coming out the next quarter with all of these different numbers coming out in the december quarter. don't you see in 2013 that that margin expansion level could come back to apple and be a reason why you'd want to own it on a sell-off? >> they could get profit expansion on the new products. no question, the iphone is driving the profitability of the company. the ipad line, the profit margins are much lower. we learned that from some of what they disclosed in the samsung trial. what's happening is smartphones, though, is we're now starting it penetrate parts of the world where they don't have much money. india, for example. china, if -- are we going to get the same subsidies? the only reason people can afford to buy the iphone is because the carriers are subsidizing them.
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so again, as you get into next year, this becomes more of an issue. part of what's driven apple's stock the last couple of years is they have improvements in profit margin every year. how long can that go on? they already have a 30% profit margin. unprecedented. >> henry? it's steve grasso. so amazon we know now gets 68% of its profits from electronics and general merchandise. where does -- you alluded to, they made an incredible amount of spending. they divested a lot going forward. where does apple become, dare i say, a value trap that no one would be willing to say now but could you see that happening? i think you aluded to it already. >> apple, a value trap? the stock could fall a lot -- >> yeah -- >> before you get there. i think that's where microsoft for a lot of people is now. >> i'm going to give you a different view before we get to guy and apple or amazon. anybody can jump in. as a long-time apple user, here's the difference between apple and most companies. when you -- and i love the mac numbers, by the way. nobody's paying enough attention
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to those in my mind. once you're in the apple ecosystem, you've got the apps, the music, the books, you're not leaving. it's the roach motel that's five star. >> that's -- >> you're not getting out. >> that is the most, right, the reason why i think you on auto -- that's why you own apple. the other side, look, coming at this two ways. the trading side we've talked about 610 in the stock sort of being the pivot point. it's actually worked well. obviously you see the stock trading 595 or so. and you have to ask yourself, what is the downside level, where's the -- as a trader do i re-enter the stock. we can talk about this. as an investor is the moat strong enough to keep products from becoming -- we used the word last night and dare i say it gowanus, ub it, ubiquitous. sony was taking over the world in the '80s and is nowhere now. that's the questions you need to ask. my sense is that moat is strong enough. but at a certain point, does somebody sort of build the bridge that crosses that moat? we're clearly not there yet.
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maybe someday we will be. >> brian, here's a couple reasons that i think you want to continue to focus in on this stock. number one, the fx hedging, i don't know if we'll have as volatile a year in f.x. trade, i don't think we will. that cost them 24 cents, the hedging, much more than expected this year. if they don't this v that nenexe numbers are looking better. look at what's going on with the number of sales? japan, for instance. japan was up 43% year over year. like to henry's point, this is not an emerging market. it's a mature market. yet, these tech-savvy folks just flocked to the ipad and iphone and ipod in huge numbers as well as mac. i think there's a lot of upside coming from this. by the way, over the past decade, amazon's up 80 -- rather, 1,000%. and apple's up 8,200%. >> quick audible before we get to john ford.
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i want to ask anybody, i'll ask the group, you mentioned the currency. big issue, john. every major report i have seen talks about a negative impacts in currency conversion. it's skewing a lot of the numbers. how much should we care about that? >> i think you should care about it a lot. i mean, you heard it from mcdonald's. you heard it from starbucks. >> i've heard it from everybody to be honest. >> yeah. like i say, this was a volatile period where you saw just dollar to you are going from 1.30 to 1.22 or 1.22 back up to 1.30. if you can play that range as accurately as some people hopefully in f.x. did, then you shouldn't be making product, you should be trading f.x. these guys got carved up by that because they were hedging much the way airlines do when they have to hedge as far as the going forward price of crude oil or jet fuel. >> all right. well, let's move on a bit kind of. now that apple has finally vealed its -- we could do a whole show. face it. we did actually when i was in california this week. >> that's right. that was a good one. >> now that they've unveiled the
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ipad mini to the world, there is one big question -- will anybody buy it? preorders begin today. and cnbc's john of all thing, apple this week, keeping track of the numbers. what do we know? >> well, we actually don't have a lotting to o as far as ipad mini numbers. less than an hour after apple opened preorders at 3:00 a.m. eastern, the white mini sold out. apple won't be shipping more of those for another two weeks. people who preordered the black version still hearing from the web site it will arrive a week from today. but we can't read too much into the first hours of preorder. we need some data to work with. two things i'll be looking for, one, a press release from apple today or monday letting us know how preorders are going. two, really have to get a look at apple stores a week from today. will there be lines and will apple treat this like an iphone launch? they'll have a sense of that from the preorder, how big it should be. those two things i expect will be big. not just for apple but also amazon, google, and barnes and noble who also have smaller tablets out there. if apple does some great number like, i don't know, three million ipad mini preorders the
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first calm of days, you wonder about the impact on the other guys. the journal" said a couple of weeks ago apple wants to make ten million minis. you wonder do others have a viable business selling those at zero margin. >> to you first, john. you said the white version has sold out. do we know how many they're producing? >> aha -- >> didn't make ten. make ten and be like, oh, it sold out. limit two per customer. >> that's the thing. often times they have trouble making white versions of things, the white iphone was delayed for a long time. they've had light leakage around the screens with white products. maybe they didn't make a lot to begin with. they snoeld old out in 20 minut something. maybe they only had a couple of thousand. >> henry? >> yes -- >> the nexus seven, 1.99, something, ipad mini, the same size -- apple touting the slightly bigger screen. too at $329? >> it's expensive. but you said it. you stuck on the ecosystem.
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in my household, the startized on apple. if we buy google, you can't get the movies or books. i think they're bringing the price down next year. i think so. >> you touched on something there. does google have a chance to make the ecosystem that apple has -- we spoke with it, guy and i spoke about it on the desk last night. i think on a commercial break. it's good to do it on air now. does google have the chance to do anything remotely the same as apple there and take it away? >> they is a chanhave a -- theye a chance but not the distribution. apple has a the store network, powerful muscle. google in many businesses. even though the tablet was well reviewed and cheap, people don't know it exists. and they're standardized on apple. it's going to be a big challenge. amazon in a similar situation, but they have better distribution through >> yeah. and let's not forget what apple said, right? they said that the tablet market has outsold the entire p.c. market lately. and that 91% of all tablet-based
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web searches come through an ipad. i mean, they own it. is there a tablet market? or is there apple? >> there's apple. >> really? >> you disagree -- if you disagree on twitter, folks, send hate mail to pete. on deck in a shocking move, citigroup firing its top analyst. we've read the complaint. we'll bring it you to. has facebook gotten its groove back after this week's big gains? we'll get some answers. after a tough year, is paul son revamping his strategy?
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welcome back. we've got our three top trades. there's a giant sign i'm blocking. the first up is expedia.
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soaring on a quarter driven by an increase in hotel bookings. you've got tradin. guy, your take? >> last night we said it's probably -- obviously going to open a lot higher. an opportunity to short it against $60 which has been resistance again. if you look at the way the stock has traded today, it's pretty much exactly what happened. the valuations are reasonable. i think the shorts, 11.5%, 12% shorts are getting squeezed today. i think you short it against 60, you cover if it breaks $60. >> fewer people dumping ziplock bags and pennies in the machines. coinstar missing on third quarter earning and revenue. coinstar shares selling off but recovering nicely. up 5.17%. john? >> it's because they're not just dumping money into the machines at the grocery store. they're also buying and renting videos through redbox. and that's one of their big ventures, of course, that's driving the stock. the stock opened near the lows of the day. it's traded five times normal
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volume as it churns and burns to the upside. better than $5 above the low of the day. a fabulous move. like amazon, when you see a stock with bad news and reacts to the upside, that's telling you something. >> like reverse slot machines, john. thank you. finally, arch coal getting a rare pop after reporting strong earnings on improved thermal coal shipments. as we know, the stock down over 40%. steve grasso, your take? >> you know, i play these coal names -- specifically the powder river basin names, prb names, btu and aci. i played them going in as a debate play because i knew they'd be mentioned by governor romney in a more liked fashion than we've seen under president obama. but after a pop like this, 10%, i had to cash it in. i sold my aci, btu. i'll wait to buy them back later. >> steve, thank you very much. let's get more now on the surprising story from citigroup.
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earlier today, firing its main internet analyst. we have more on this developing story. kayla? that firing comes on the back of a $2 million fine from a massachusetts state regulator claiming failure to supervise not only mahaney but a junior analyst in the group who remains unnamed in reports and in the consent order. that analyst also terminated a month ago. mahaney's firing happening just today. both concerned unauthorized dealings with reporters. in mahaney's case, an e-mail chain with a french reporter working for "capital." he responded on the record to questions about revenue estimates for youtube which were previously unpublished. and when a communications rep reminded him that he would need clearance to respond, he backtracked and said he wouldn't respond. the junior analyst sent a preview page of unfinished research to the head of the facebook app to a reporter at tech crunch. it gave the bulk of numbers that would appear later in a full 30 to 40-page note. during the process, the owner said that facebook reminded citigroup several time of
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nondisclosure agreements related to some info. shared by the company, namely user base. definitely an interesting story. brian, we're just seeing headlines now from the "wall street journal" that say that the massachusetts secretary still looking at facebook-related actions and that perhaps the citigroup analyst case is not the only one. >> kayla, thank you very much. let's talk more about this now with henry. i am confused, okay. i read the report. really there's two different things here. there is mahaney getting in trouble by responding to a french reporter's e-mail about youtube estimates back in april. he was reprimanded internally, end of story. the junior -- there's two separate stories. the junior analyst working for mahaney apparently fired off the reports to his buddy who worked at a well-known blog. i'm a little confused as to why mahaney got dumped for this. >> it's interesting -- >> am i the only one? >> the junior analyst was fired a month ago. now mark is getting fired today. look, he's a great analyst and great guy. this is a bummer what happened. and the story that you referred
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to, sounds like in a moment mark said he hadn't responded when he had responded to the first journalist. so there's a moment, i understand, why they're looking at that. but clearly this is all about facebook. what the junior analyst did is a complete violation of every rule, ethics, everything else. no surprise there. but i have -- same question, did mark know about this. he's obviously taking the fall for it. but perhaps he knew about it. i don't figure it out. in the complaint it's not clear. >> the youtube stuff that kayla mentioned about responding to an e-mail from a reporter in france about revenue estimates for youtube, you could tell he responded quickly, yeah, they asked, did you respond, he said no. always the cover-up. never the action. it was almost like in the complaint they were trying to establish a pattern. >> yes. the prior misconduct as they referred to it. the prior misconduct would not be in the news if it weren't for -- >> bottom line, big loss for citi? >> yes, he's very good. he'll bounce back. shows how tough these regulations have become. and to kayla's point, i wouldn't be surprised if massachusetts
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has more other firms dragged into this. >> all right. thank you very much. do not look now, but facebook has had a huge week. tuesday night's better than expected third-quarter results, shares on track now for a record weekly gain which not saying a whole lot. but it's better than dropping. right now the stock is up about 17 -- almost 18%-plus on the week. so nowhere near the ipo price, but kind of coming back. coming up, it is shaping up to be the wildest tech week of the year. we're going to talk about a trade, some of the biggest movers. next up, microsoft begins selling windows 8. and the stock this week fell. is windows 8 a big yawn or a big deal? [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart. is windows 8 a winner or a whole lot of average? the market may say the latter because the stock actually down about 2% this week. so let us trade this. pete, your take on not just windows 8 but microsoft. the actionable info. please. >> the performance of microsoft obviously is just not there. that -- that started before this
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launch. i think this launch actually is something that puts them on the map. they've needed to get themselves into the tablet market. this gives them that user-friendly tablet experience. the touch experience, it's going to -- something that the consumers have wanted. they're going to enjoy it. this is going to be big. >> my hometown is on the map, too, but nobody stops there. that's the problem. doesn't matter that it's on -- >> nice -- >> doesn't matter that it's on the map. a little press attention. the stock fell this week. >> but it brings that world of p.c. to the tablet market. opens it up. i've heard stunningly very positive stuff about -- >> stunningly bad stuff that it's sorts of a middle -- a lot of it coming from apple. >> of course. surprise, surprise. apple starting to take a fire at microsoft. >> henry? >> i'm sorry? >> i was going to say, were you surprised that ceo of apple, tim cook, bashed the surface -- >> yes. >> usually they are quiet like we're not going to deal with microsoft. they're here, and we're apple. >> on the one hand i admire apple's willingness to take a shot at its competitors. i think apple needs to realize that this mentality came from the days when apple was a big
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underdog. feisty and so forth. now they look like they're beating up on a company that they've left in the dust years ago. i think they've got to start to control that a little bit. >> the best way to bully somebody i guess is to not mention it. right? >> i did that. >> that's the better dis of all. steve grasso, trade on microsoft? >> i think it's all about apps. you know, i would ask the other guys at the desk, if you have basically just the windows store here for apps and you're going against 250,000 apps with your competition and more, i don't know if you could survive. i think people basically buy these tablets to be using the apps. and i think that's the major catalyst. so chicken or the egg, i'm not sure you could have this rollout without enough amow on the app side. >> mossberg gave them a night write up. that was one good thing from a respect on the tech side. he certainly has that, steve. >> that's the biggest one. mossberg's probably the biggest -- >> i agree steven that a lot of what people like to do with these tablets is find a cool
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app, whether it's a game or whether it's actually something more useful. and put it on that tablet. obviously you have a lot more choices with apple. and that's why that ecosystem is -- >> and the -- -- $800 million. talking about 40% more on the preorder side than you had with windows. this thing is actually going to be more exciting than you guys are -- [ all talking at once ] >> i'm not bashing microsoft. it's not my job. how about this ainge eel -- if windows 8 is not a big hit, if the strategy is not a big hit, is ballmer out? >> yes. >> tough question. >> i would say yes. i would say people are waiting for some reason why they need to push this guy out. he's been under fire for a long time. this has been what everybody's been hanging their hats on. windows 8, windows 8. now we're getting windows 8 -- >> there's more to microsoft than this. the whole sequel server data base, back end stuff, enterprise, we never talk about. that's a cash cow. >> absolutely. the market moved against them. no question they dominated it. they were -- so much that they were dragged into court.
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they have completely missed the move to mobile. the iphone is bigger than microsoft. the entire company, just that one product, it was invented five years ago. so to miss a market like that -- >> unbelievable. >> you have to hold somebody accountable eventually. >> all right. >> well, from microsoft's windows 8 to apple's new ipad mini, it has been a very big week for tech and tech announcements. who had the best week? investor ryan jacob, who is the big winner? >> well, you know, we were still positive on the apple launch. i know people are disappointed with the price point of the mini. but for a product that's clearly superior to the low-end tablets, it's a very attractive price point for people that had wanted to buy ipads but weren't willing to shell out $400, or $500. >> are shares at an attractive price point? >> we think so. still trading at ten or 11 times earning even though their growth
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has slowed. apple conservatively should grow revenue and earning 20% to 25%. strategically nothing has changed with apple. >> why has apple lost $100 a share in the past month? >> you know, near term it's difficult to predict. you know, in terms of investors' expectations. so you know, apple, you know, is cheaper than it was obviously at $700 a share. and we think that even though they're going through a product transition, margins dipped a bit, you know, with all of these major product refreshes and the mini launch, we think it's giving you an opportunity. >> so, two questions i'd love to get your take on of the first is, they've just launched a whole bunch of new products. we get out two quarters now in the middle of next year, they won't be near to refreshing quarters. are we going to have a big drop where they're effectively in a black hole before we waits until the refresh later? secondly, they have such a high profit margin, and the new products, ipad and ipad mini,
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are going to be lower than the iphone. aren't you worried that the profit margin starts to decline or stops going up over the next couple of years? >> yeah. let me answer both questions the same way which is in terms of early next year, there will be a little bit of a black hole in terms of product refresh. but when we see is as they lower prices on existing products, the demand for elasticity is strong. when you're looking at iphones, later models -- earlier models, excuse me, trading at higher prices, we've seen demand elasticity. in terms of margins, not only are they lowering prices on products that may be out three or six months, they're actually generating higher margins in these products. i think in both cases you'll see the financial improve early next year, not really seeing a significant deceleration in revenue. >> and with all the news this week about some of the other tech names, yahoo! quietly has done well. even on a lousy tip today, the stock is marginally higher. i still think the risk/reward in yahoo! sets up really well. what do you think?
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>> we agree. it's one of our largest positions. we've stuck with it for a while. we've been patient. one of the reasons it's one of our largest positions is not because we think yahoo! can double from here. but rather we thought the risk was extremely low. and obviously if -- if the new ceo, marissa mayer, is successful in turning around the business, yahoo! could be a huge winner. but you don't even need that. in terms of the current assets, asian assets, you know, and you become out their cash, you know, you're looking at a core business, trading one to two times ebitda. the opportunity for gains are really there. and your risk is extreme leap minimal. >> those are big names. before you go, give us an under-the-radar pick. >> well, you know, one of the companies we own, i wouldn't call it under the radar, but, a chinese portsal -- chinese stocks have been terrible the last 12 or 18 months. it has a chance to be a leading social network company in china.
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they have a successful twitter product that's -- really turning into a twitter/facebook hybrid. and you know, at a $4 million market cap, there's room to go if they're successful. people -- if investors get a little bit more positive in the chinese market, this could really do well. >> all right. ryan jacob, thank you very much. have a good weekend. any of you traders in traderville have a comment on yahoo!, apple, microsoft, s, panda bear endanger. or anything in the middle -- >> i agree, yahoo! remains undervalued. whether or not that mean the stock's going anywhere in the near term, i don't know. i think it seems like it wants to be flatlined. that's an interesting name that remains cheap. just doesn't seem to have that oomph to the upside. >> you know, dan lobe, the third point well on hedge fund manager, he's seen a lot of value in yahoo! for a long time. >> it's quietly gone from 14.50
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to 16 and change. i think if you identify risk and reward, yahoo! is $20, $20.50 on the upside, $14.50 -- the downside risk at best. >> henry knows what yahoo i can't hoo's aboyahoo!'s about. converting page views into dollars. >> i should say, though, i think marisa meyer did a great job on the call the other night. i work for yahoo!, not going to talk about it too much. but i thought she did great. she inspired it. she's re-energized the company. a lot of people had left it for dead. that is a big accomplishment. >> watch sina, too. it's down there at the 100-day moving average. just what mr. jacob talked about. if it breaks through, it might only have a temporary breakthrough there. so 56 level, roughly 55.5. watch it here. i would try to buy it around 53 because i think it breaks the 100 day and gets to. there then it's a great buy. >> we will watch it, especially if it hits 53, john. thank you. when we return, where do to see invest now. if economic growth continues its slow and steady climb.
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first, kate kelly with new information about you head fund manager john hapaulson. >> a mixed year. hedges against further catastrophe in europe not performing well. i'll tell you what takeover target paulsob has doubn has do on coming up. years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪
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apparently the magic touch of billionaire hedge fund managers just ain't what it used to be. john paulson fighting another rough year in his well-known advantage funds, and downsizing is prompt something investors to bail out. but there are a couple of ideas that have worked. kate kelly is here to tell us more. go brian, in an investor gathering this week, paulson disclosed for the first time that he's betting big on nexen, the canadian company poised to be taken over in a $15.1 billion deal if approved. doubts were raised about the deal this past week when the canadian government shut down a planned purchase of another calgary energy company by the malaysian oil company petronas. paulson is telling investors he's confident about the tie-up. in fact he saw the headwinds coming. he told people a few weeks ago to expect a scare on the deal which, of course, then happened. this week he used that dip in
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nexen shares that came with the petronas rejection to increase the size of his stake which has been built during the current quarter. it's the sort of investment paulson was benefiting from well before he made history with his multibillion dollar score on a sub prime housing short in 2007 and 2008. some investors think of paulson more as an arbitrageeur than anything else. given that his merger funds called partners and enhanced have done better than many of their siblings. ironically, some of paulson's troubles came from hedges he put on in the wake of massive losses last year. hedges intended, for instance, to protect the firm against a deepening credit crisis in europe that didn't come about yet. big positions in a number of gold miners including anglo gold and gold fields have also dogged him as the miners struggle with labor, strife, and diminished production. but the miners are a cheap way of getting into gold in the coming years. and paulson expects the yellow metal to rally as the central banks continue printing money. >> yellow metal to rally.
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now that's something we've heard for a long time. and gold, kate, has gone up a bit, down a little bit. you know, 1500 to 1700 sore sor. how long will investors wait? >> mapaulson was asking about ts a couple of days ago, investors had a chance to talk about his positions. he's indicated that it's a multi-year thesis weather center it's two years, five years -- thesis. whether it's two years, five years, difficult to say. anglo gold being a great example, trading well below where they should be. a cheap way to get to a metal that costs, as you said, 15, 17, $1,800 at one point for an ounce. if you get into the miners and is a long-term option to get into the metal, that's the long view. >> any holdings that popped out to you that you noticed? >> yeah. i'm glad you asked. a couple of interesting things. realogy which went public a month ago and had an amazing sort of 25% pop on its first
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day, hem nicents of a few tech ipos that we've seen, that's something that paulson owns part of. they're well positioned and will hang on to. they saw a nice paper benefit. and a bank called one west, you may be familiar with it in terms of the former indymac. they own about just south you should say of 25% of one west. and cashout options for the name in the future could include an ipo, a sale of some sort. they haven't liquidated it, but that's one option that they're -- one situation that they're talking up to their investors. i should say the book value on that one has apparently grown about threefold since they got into it in 2009. >> kate kelly, thank you. steve grasso, i know it's tough out there in remote tvland. your take? >> yeah. i'm at the kids table. appreciate it. >> you can't wave your hands like these guys do. or -- >> that's right. >> do other hand signals which pete assures me are old-time floor signals. it's the one lap to go sign.
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>> exactly. paulson's extremely optimistic about this cnook/nexen deal. i think for good reason. c-nook has spent a considerable amount of money lobbying on this deal. that's why he's so optimistic. i do have a lot clients that are playing this. this is going bigfoot interesting why based on a price of 23.35 there's a pretty good upside potential here. >> all right. steve, thank you very much. you are always welcome at the adult table, by the way. let's hit the biggest pops and drops in midday trading. a name not that we talk about too much, cerner, big pop. >> the quarter wasn't great. didn't necessitate what we've seen. it's sold off the last couple of months. even with the move today, a story worth watching. i do think it's a stock that's continually worth owning. >> drop -- decker's, maker of the ugg boot. keith -- you're not just a
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customer. >> yeah. i don't know -- i know tom brady can't hold the stock up anymore. the problem is now their guidance, 33% below what they had had previously. people expected 9% to 10%. it's 33%. that's a bad thing. stay away from the name. >> drop. dean foods. investors milking this baby for all they can. steve grasso? >> they spun out white way out of the ipo. white way seen as the growth story. they're carving it out from dean foods. probably just reevaluating it. i'd waited until the smoke clears on this. >> fair enough. and a drop, another wig drop in a big tech name, john. >> yeah. no pun for this one. basically verisign had a great report but disclosed that the commerce department was taking a long time to review their dot-com registry where verisign made all those profit. that's why investors are panicked and heading for the exits. i like it here, though. so my no one-day rules i'm not
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buying today but i'll be looking on monday. >> if i knew what they, did i would have made a pun. thank you. ahead, your best dollar trades for an improving economy. and he follows the pulse on wall street, more from our guest host, henry broad, the business insider. if we want to improve our schools... ... what should we invest in? maybe new buildings?
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the fiscal cliff refrain -- fix it or else. with all this talk is there a bigger threat to the recovery that is being ignored? apple trading lower on yesterday's earnings mess. there may be a story behind the headline to focus on. we're bracing for sandy here at cnn and elsewhere. what businesses are doing in advance of the monster storm headed for the coast. the story on power. now back it brian and more on the fast half. >> thank you very much. guys, i got to call a quick audible. breaking news. the sec charging a silicon valley second fifth for an alleged role in the raj rajaratnam case. here's what the sec is alleging. just allegations, the sec alleging that chris chellum tipped rajaratnam in december, 2006, with confidential details from internal company reports indicating that xlnx would fall short of revenue projections it had previously made publicly
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which enabled rajaratnam to short xlnx. they're not indicating anything about xlnx other than charging chris chellum, executive. obviously don't have a statement from him. these are allegations. but it is out. the sec going after a former or current xlnx executive. that story developing on what is a busy friday. the first read on third quarter gdp wasn't too shabby. showed 2% growth. and that the domestic economy while not booming by any measure is not tanking either. but there are some areas of concern, namely prices. the price index came in 33% above what was forecast. does that mean inflation's a real threat? willie williams is live from new york. your take on the gdp number? >> well, i think that the market was gently surprised. growth was accelerating faster than we expected. demand was slightly more than expected. and the inflation numbers that you said were slightly better than expected.
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i think the challenge is the fed has said we need to see a significant pickup in the employment outlook. and we need growth above 2.5% consistently before they change their current mandate. >> all right. so you said prices came in better than expected. theyhigher. is that a good thing? 2.48%. sounds laike inflation. even though real people know inflation exists, the fed just doesn't admit it. >> i agree. currently the market is -- the fed along with most central bank is more concerned with growth than a small pickup in inflation at this stage. >> your levels then to trade, give it to us. >> i like selling euro aussie. i think i want to stay away from dollar-based pairs as we continue to see u.s. rates rise. i think trading the dollar is going to be more tricky. i like selling euro versus aussie with a target of 1.20 and stop at 1.27.
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i think this trade will continue to move lower. >> all right. sell, 1.27 euro/aussie. thank you very much for joining us. have a good weekend. >> thank you. more on the case. reading through the press release. chellum agreed to pay more than $1.75 million to settle the sec's charges. had to get that in there. all right. catch trades like these tonight on cnbc's "money in motion." show airs every friday at 5:30 p.m. eastern time. let's stick with the improving gdp and picks for top 2% growth. steve grasso, any trade on the gdp number? >> you can pretty much buy anything if we're going to be in a better growth environment. a name that's levered and levered to the economy is wnc, wabash national. problem -- market cap is around $500 million. you might want to be careful. it does have a tendency to move. a $6 number. remember, fiscal cliff issues, if we go off the cliff, that carves out 4% from gdp. they can solve it retro
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actively, but we can go over that cliff for the first quarter or so. >> all right. thank you, steve grasso. by the way, how traders are positioning themselves ahead of hurricane sandy, which is a major -- calling it the frankenstorm, folks -- may not be hyperbole. coming next week. we'll get our take on that. and what a new report says about the leadership shuffles at the top of city group. was the board -- was it completely honest about what happened? maybe not.
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we call it the twicker. let's find out what's getting the most biz today on the twitter. >> people are using twitter to talk about how they are prepping for the storm. let's get straight to the tweets. dina says hurricane sandy is worrisome. remember isabel in '03, gaston in 2004? trees down, flooding. i'm prepared now with water, batteries and beer. fema -- double check your emergency kit. traders are also trying to assess which companies will be impacted by the hurricane. bespoke investment tweets with sandy setting its sights on the east, here are some stocks that
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tend to benefit from major storms. briggs and straton. >> i'd go diaper. i'd stick with home depot and lowe's. they're doing everything right anyway. with the housing boom that's starting to become a boom finally off of these lows, i think those names are better than just this one-time event. >> our next tweeter, trader tom is watching home depot saying it could be a play around what some are calling frankenstorm. >> trader tom clearly just listened to pete najarian here on my right. it's off $4 since its all-time high. the balance sheet is impeccable. clearly there will be huge traffic there. i don't think that's pete's point. the story remains intact for hd. the tape's not helping
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>> i was at home depot last night. make sure they have the stuff to sell. they won't benefit unless the stuff is there for people. every generator, out the door. thank you, seema. "the new york times" reporting citigroup's chairman maneuvered for months to force ceo vic rpandit. "i'm story but the statement citigroup made about its ceo quitting is basically fraud." strong words from the staff room. >> i stand by that. >> why? >> because they basically said he's resigned, there was no indication he was forced out. vikrim pandit was fired. he was offered three options, quit now, announce you are quitting at the end of the year or be fired. that is being fired. >> quit now or be fired is fired. >> so it is material to shareholders that the board decided to fire the ceo because they had lost confidence in him. how can you not say that? very simply, he was asked for
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his resignation, he delivered it. they have transmitted he was pushed out. instead we find out two weeks later the big investigative piece. >> the stock rallied on this which is an indictment of mr. pandit which is another story. but if the stock was down 10% that day, which could have happened, then they'd have a real problem on their hands. they reported earnings the day before this supposedly -- he decidedly within 12 hours decided to leave. we called sort of nonsense on it the next day on "fast money." clearly this was something in the works for months. they should have announced it the day they reported earnings. they had a fiduciary responsibility to do so. in the next hour, everybody is talking about the threat of the fiscal cliff to the economy, but there may be an even bigger threat to the recovery that is being summarily ignored. but first, our final trades coming up next. at shell, we believe the world needs a broader
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looking for ways to improve your investing skills? november 2nd and 3rd in houston, invest like a monster conference. final trade. steve grasso. >> the market could rally here but i'm more afraid of a test of the 1,396 area failing. i'd rather just lighten up and take some profits. >> jon. >> i'm buying car max. >> ebay continues to work. forget about amazon. >> price action and net application is very interesting. something afoot there. "money in motion" starts at 5:00 p.m. eastern. "power lunch" starts right now. thanks for being our guest today. have a great weekend, everybody. "street signs," another very fine program begins in just over an hour's time. take care, everybody.


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